California Savings Bond Program - - CA Government

Section § 5750

This section highlights the state's growing need to fund infrastructure projects through various financial obligations paid from the General Fund. It suggests that these financial needs can help California families save for significant expenses like higher education. The legislature emphasizes the importance of families having simple and secure ways to invest for significant costs. The California Savings Bond Program is seen as beneficial for both state revenue and personal savings, helping families save for expenses such as college costs. Additionally, it's important that families using this program for college savings are not disadvantaged in terms of financial aid.

The Legislature finds and declares all of the following:

(a) There is a growing need for the state to finance capital projects to renew and expand the state’s infrastructure through the use of various types of revenue obligations that are paid from the General Fund.

(b) The need for these capital expenditures could also offer a simple way for California families to save for the costs of higher education and other significant expenditures that must be planned for over an extended period of time.

(c) Families need convenient and simple methods to make secure investments for major expenses, such as funding higher education expenses.

(d) The California Savings Bond Program will benefit the state by providing sources of revenue for capital redevelopment projects and will benefit individuals and families by providing a simple and safe method of saving funds for expenses, such as higher education expenses.

(e) Families who use this program for college savings should not be penalized by the financial aid system.

infrastructure financing capital projects General Fund revenue higher education savings California Savings Bond Program secure investments family savings financial aid impact college expenses capital redevelopment revenue obligations major expenses planning simple investment methods state infrastructure education cost planning

(Added by Stats. 1992, Ch. 954, Sec. 1. Effective January 1, 1993.)

Section § 5751

This law section defines key terms for understanding this chapter. "Bonds" refer to various forms of debt issued by or for a state agency, like general obligation and revenue bonds, and also includes financial instruments like mutual funds. "Governing body" is the decision-making group overseeing a state agency. "State agency" refers to the definition found in Section 11000.

As used in this chapter, the following terms have the following meanings:

(a) “Bonds” means general obligation bonds, revenue bonds, or any derivative evidence of indebtedness which includes, but is not limited to, interests in pools, money market mutual funds, and unit investment trusts, issued by or on behalf of any state agency.

(b) “Governing body” means the board, authority, trustees, director, commission, committee, secretary, or other policy making body that exercises authority over a state agency.

general obligation bonds revenue bonds financial instruments pool interests money market mutual funds unit investment trusts state agency governance decision-making body policy making body debt issuance state agency debt Section 11000 financial definitions

(Added by Stats. 1992, Ch. 954, Sec. 1. Effective January 1, 1993.)

Section § 5752

This law section explains the process and terms for the Treasurer of California to sell savings bonds. The Treasurer can determine when these bonds are sold and request that the governing body authorize bonds with specific terms.

These terms include that bonds can be issued in any denomination the Treasurer wants, and they can have different denominations within the same issue or series. Additionally, bonds can have no interest or interest that is paid only at maturity.

For bonds without pre-maturity interest, the principal amount is based on the cash price paid plus issuance costs. The Treasurer must certify the principal amount after the sale. Bonds can be formatted to fit financial systems and may be called "California savings bonds" to show they follow this chapter's benefits.

The Treasurer may sell California savings bonds in accordance with the requirements of this chapter. Notwithstanding any provision of law, when the Treasurer determines that bonds are to be sold, the Treasurer may request the governing body to authorize bonds with the following terms and the governing body shall authorize these terms:

(a) The bonds may be issued in a denomination or denominations of any amount or amounts requested by the Treasurer and all bonds of the same issue or same series need not be of the same denomination.

(b) The bonds may bear no interest or may bear interest payable only at maturity or at the times and in the manner established in the resolution, indenture, agreement, or other instrument providing for the issuance of the bonds.

(c) For purposes of determining the principal amount of bonds outstanding, in the case of any bonds that do not provide for payment of interest on the bond prior to maturity, the principal amount of these bonds shall be the cash price paid by the initial purchasers of the bonds to the state plus the amount of any costs of issuance of the bonds. Within 30 days of the delivery of any bonds, the Treasurer shall submit to the governing body a certificate stating the principal amount of bonds, calculated as stated in this subdivision, which have been sold, and this certification shall be conclusive for all purposes.

(d) The bonds may be issued in any form requested by the Treasurer in order to satisfy the requirements of a book entry system of depository trust companies or other similar financial institutions.

(e) In addition to the standard designation, the bonds may be designated “California savings bonds” entitled to the benefits of this chapter.

savings bonds Treasurer governing body denominations interest maturity principal amount issuance costs certificate financial institutions book entry system California savings bonds bond terms sale authorization cash price

(Added by Stats. 1992, Ch. 954, Sec. 1. Effective January 1, 1993.)

Section § 5753

This law allows the Treasurer to set certain rules when selling bonds. First, California residents who want to use the tax-free income for college get top priority to buy them. Other California residents are next in line. Second, no minimum purchase size can be required when buying these bonds. Third, while individual investors want more bonds than are available, the bonds can't be sold to big institutions.

In arranging the sale of bonds, the Treasurer may impose the following requirements on any financial institution that sells the bonds to the public:

(a) California residents planning to use the tax-exempt income for college expenses shall have first priority for purchase of the bonds and all other California residents shall be given second priority for purchase of the bonds.

(b) The broker or institution marketing the bonds may not establish a minimum order size.

(c) As long as the demand by individual investors is greater than the supply of bonds, the bonds shall not be sold to institutional investors.

bond sales Treasurer requirements California resident priority tax-exempt income college expenses minimum order size institutional investors individual investors financial institutions public bond purchase broker restrictions bond demand supply of bonds bond marketing rules bond purchase priority

(Added by Stats. 1992, Ch. 954, Sec. 1. Effective January 1, 1993.)

Section § 5754

This law section allows people who cash in California savings bonds they've owned for at least five years to exclude up to $25,000 per year, per student, from calculations used to determine eligibility for state financial aid at colleges. This amount is adjusted for inflation starting from January 1, 1993. This exclusion applies only to bonds redeemed in the 12 months before financial aid is awarded.

Also, bonds issued before January 1, 1993, are generally not covered except if they meet the same conditions mentioned above for exclusion.

(a) A person who redeems California savings bonds and who has owned the bonds for at least five years, or a person designated by the owner, may exclude the amount redeemed to a maximum of twenty-five thousand dollars ($25,000), per year per student, adjusted for inflation after January 1, 1993, according to the California Consumer Price Index, from any required calculations of income and net worth for the purpose of making state financial aid determinations for any public or private postsecondary educational institution in this state. This exclusion shall only be available for bonds redeemed or to be redeemed in the 12-month period preceding the date of award for financial aid. Notwithstanding Section 69506 of the Education Code, the modification made by this section to the methodology set forth in federal law or regulation for determining the expected family contribution of students seeking any state-funded financial assistance is determined by the Legislature to be in the best interest of the state.

(b) This chapter does not apply to college savings bonds issued by the Treasurer prior to January 1, 1993, except that a person who redeems college savings bonds issued prior to January 1, 1993, and who has owned the bonds for at least five years, or a person designated by the owner, may exclude the amount redeemed to a maximum of twenty-five thousand dollars ($25,000), per year per student, adjusted for inflation after January 1, 1993, according to the California Consumer Price Index, from any required calculations of income and net worth for the purpose of making state financial aid determinations for any public or private postsecondary educational institution in this state. This exclusion shall only be available for bonds redeemed or to be redeemed in the 12-month period preceding the date of award for financial aid.

California savings bonds state financial aid eligibility income and net worth calculations postsecondary educational institution inflation adjustment California Consumer Price Index college savings bonds expected family contribution financial aid determination bonds redemption financial assistance student aid calculations income exclusion state-funded financial assistance bond ownership duration

(Added by Stats. 1992, Ch. 954, Sec. 1. Effective January 1, 1993.)

Section § 5755

This law allows the Treasurer to sell bonds under a general authority, meaning they have the power to do so even without specific instructions for each bond issuance. It provides a complete and separate authority that works along with other laws about bond issuance.

The general authority of the Treasurer to sell bonds, as provided in this chapter, is intended to be in addition to, and not limited by, specific provisions authorizing the issuance of bonds and is a separate and complete authority for the actions authorized by this chapter.

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(Added by Stats. 1992, Ch. 954, Sec. 1. Effective January 1, 1993.)